Despite consumers' tepid response to Internet appliances so far, National Semiconductor is still forging ahead in the market.

At this week's Embedded Processor Forum in San Jose, Calif., the chipmaker announced a new design for delivering increased performance to its Geode system-on-a-chip processors for Net appliances.

The announcement comes after the recent demise of 3Com's Audrey, steep price cuts for Net appliances from Gateway and Compaq Computer, and a less-than-stellar track record for market pioneer Netpliance.

But National Semi is betting that Audrey is a martyr to a worthy cause.

The quick and unlamented death of some of the first Web appliances has been "certainly disappointing, but not surprising. The first-generation devices were exactly that--first-generation devices," said Mike Polacek, vice president of National Semi's Information Appliance division.

"We see lots and lots of ideas for new products, and some are going to be home runs and some will be strikeouts," he said. "I think we're realistic that it's going to take some time for these consumer devices to work out" their features, prices and forms.

About 150,000 Internet appliances shipped last year. Market researcher IDC predicts that shipments of such appliances will reach 500,000 in 2002 and 2.7 million in 2005. Still, IDC projects that the market for all Internet-surfing devices--which includes set-top boxes, game consoles and a number of other products--will grow to 170 million units in 2005.

Santa Clara, Calif.-based National Semi will be there with the Geode all-in-one chip and related technology, which meanwhile will be focused on set-top boxes, stripped-down corporate desktops and retailer point-of-sale terminals.

The new Geode design, dubbed Geodelink, features a data pathway that will link the various parts of the chip in a way that allows them to communicate more effectively. A system-on-a-chip melds a number of building blocks needed for an electronic device, including a central processor, graphics, memory controllers and input-output. This style of chip is becoming more popular in the Internet device market.

National Semi said Geodelink's new pathway, called a switched fabric because it allows different blocks of the chip to connect to each other independently, will result in higher bandwidth and therefore better performance for multimedia.

"That allows very quick connections between (Internet Protocol) blocks on the chip and overall allows extremely high bandwidth" for multimedia, Polacek said. "If the bandwidth isn't there...you're going to see frames dropped or low resolution."

While those advantages are expected to help Geode's position if and when the Web appliance finally takes off, they should also help National Semi gain an edge in more current markets for set-top boxes, handheld computers and game consoles.

"It does make sense (for National Semi) to go after set-top boxes because the volumes are there," said Brian Ma, an analyst at IDC. "The Web terminal market is certainly struggling at this point and vendors are stumbling to draw the attention of consumers. We think that we will eventually see vendors come along that develop the right products, yet it will likely take some time."

The set-top box market will take some battling to breach as well. These boxes, which serve to control a household's access to cable TV, satellite and, in some cases, DSL service are "very well defended," said Scott Hudson, an analyst with IDC.

However, set-top boxes with more advanced features are expected to come on the market between now and 2005.

"If National (Semi) can hang in there long enough and get enough of the smaller design wins, I would see that as a success," he said.

Polacek insists, however, that the Web-surfing appliance market will pay off at some point, and at a much lower price.

"Not everyone wants a PC," he said.

Meanwhile, the company's largest successes have been in Windows terminals, also known as thin clients, which are throwbacks to the mainframe era and whose applications are hosted by a central Windows server, and niche markets.

"We shipped, for example, hundreds of thousands of units for a voting machine in Brazil," Polacek said. Geode-based voting machines were used in the country's most recent elections. This all adds up to a pretty reasonable market."

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